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WeWork founder in Mortgages; 5 trends (kinda); FRAUDSTER charged 🚓

By February 4, 2021 No Comments

WeWork cofounder launches mortgage startup

WeWork co-founder Adam Neumann is one of the driving forces behind Valon Mortgage Inc., a startup promising to cut mortgage-servicing costs by half. 

And, they just raised $50 million from investors.

Valon, formerly known as Peach Street Inc., has won approval from mortgage giant Fannie Mae to service its home loans, co-founder and CEO Andrew Wang said, and aims to increase its current book of mortgages from $30 million to $10 billion by year-end. He said it’s the first new loan servicer to gain Fannie approval using its own software and technology.

Timothy Mayopoulos, president of digital-lending startup Blend Labs Inc. and the former CEO of Fannie Mae, also recently joined the board.

Existing investors who participated in the latest funding round include New Residential Investment Corp., an affiliate of Fortress Investment Group.

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5 trends to watch (but not follow) in the mortgage industry in 2021

Very interesting take on the whole ‘here’s what’s going to happen in 2021,’ from the Motley Fool. And while it’s an interesting read, it’s important to not take too much on board, as the predictions are not exactly solid. 

“Nationwide lockdowns and other precautionary procedures saw more people working remotely than ever before. As a result, people spent more time at home. For those living in the city, it became attractive to upgrade to bigger homes in the suburbs or in other, cheaper metropolitan areas,” writes author Courtney Carlson.

“This dramatic shift in consumer behaviors has many wondering what 2021 has in store for the mortgage industry. Here are five trends I'm looking for in the industry this year,” Carlson adds.

However, it’s not what the author is claiming, rather more about the way they make the claim. It’s almost, like, more negative than other projections.

For example, take the #1 projection:

1. Mortgage rates will rise in 2021 and beyond

Well, this everyone agrees on, simply because rates can’t get much lower. But it’s the “and beyond” that makes it sound like rates a going to REALLY rise, which isn’t the case. Rates are expected to hover around 3%, like they are doing right now, for the foreseeable future. “A steady rise in mortgage rates could ultimately have the effect of slowing down mortgage originations — more on this shortly,” the author adds, even though a “steady rise” is not what is being predicted. The author expects rates to rise as high as 3.2% in 2022. Is that enough to deter homebuyers?

Let’s balance this with the opinion of Sanjiv Das, the head of Caliber Home Loans. He wrote a 2021 prediction report for MarketWatch (warning, metered paywall), but you can also read it for free on his LinkedIn. Das simply states, “Interest rates will remain low,” which means low mortgage rates.

Furthermore, the Motley Fool is noting that originations will be down. Which is true, we are coming off an absolutely stunning year, so to think we can be as strong as 2020 is probably not going to happen. But what they fail to mention is that it COULD happen. 

The industry itself is confident in its outlook. As Das states in his headline: Home sales during the pandemic are strong and buying will only get easier. 

In the end, everyone is saying the same thing. We are just different in how we are saying it. And Rise&Shred is just making sense of all of it, and putting it into perspective!

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JReal estate developer charged with mortgage fraud

Probably should have stuck to real estate, but nope! You had to go and expand your fraud horizons!

A federal grand jury has indicted a real estate developer and three others for allegedly participating in a mortgage fraud scheme that defrauded financial institutions out of at least $3 million.

Highland Consulting and Quality Management and Remodeling allegedly schemed with two mortgage professionals and the owner of a remodeling company to fraudulently obtain at least $3 million in mortgage loans. To do so, they made materially false representations to financial institutions regarding the buyers’ qualifications for the loans, according to an indictment in U.S. District Court in Chicago.

In some instances, the owner of the two companies Andrzej Lajewski fraudulently claimed to lenders that the buyers were employed by his companies – even though he knew that was untrue – to help the buyers qualify for the mortgage loans, the indictment states.

Each count of financial institution fraud is punishable by up to 30 years in federal prison.

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